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TMI Blog2015 (6) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- Religious expenditure cannot be considered at par with expenditure on social cause. The undisputed fact is that in guise of advertisement expenditure, the assessee has incurred expenditure towards renovation of Bandeshwar temple. This expenditure cannot be considered having been incurred towards corporate social responsibility. In our considered opinion, only expenditure incurred towards discharge of corporate social responsibility can be considered as allowable u/s. 37(1) of the Act. - IT Appeal Nos. 81 & 82 (PNJ) of 2014, C.O. No. 24 (PNJ) of 2014 - - - Dated:- 9-6-2015 - George Mathan, JUDICIAL MEMBER AND N.K. BILLAIYA, ACCOUNTANT MEMBER M.R. Bangari, DR. for the Appellant. Mihir Naniwadekar, Adv. for the Respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and then the expenditure incurred in relation to such exempt income is worked out. The stipulation of sec. 14A is to quantify the amount of expenditure which is not allowable as relatable to the exempt income and not to consider the expenses one by one for ascertaining if any of these have resulted in exempt income and thereafter considering such expenses as disallowable u/s. 14A. The Assessing Officer further observed that the method prescribed in Rule 8D pertains to both direct and indirect expenditure. The Assessing Officer proceeded by computing the disallowance as formally provided in Rule 8D and computed the disallowance for A.Y. 2008-09 ₹ 22,44,429/- and for A.Y. 2009-10 ₹ 34,75,801/-. 3. Aggrieved by this, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riya Exhibitors (P.) Ltd. v. Asstt. CIT [2012] 27 taxmann.com 88/54 SOT 356 observed that the Assessing Officer was not justified in invoking the provisions of sec. 14A read with Rule 8D automatically in a routine manner without recording his satisfaction or dissatisfaction on the explanation of the assessee. The Ld. CIT(A) deleted the disallowance made by the Assessing Officer for the years under consideration. 4. Aggrieved by this, the Revenue is before us. 5. Learned DR strongly supported the assessment orders. It is the say of the learned DR that application of the provisions of sec. 14A read with Rule 8D is mandatory and, therefore, the Assessing Officer has rightly applied the same. 6. Per contra, the counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as asked to give the details of donations in the advertisement expenditure. The reply of the assessee reads as under:- The amount of ₹ 11,71,431/- expended towards Charities to some social groups/schools are in the nature of promotions of sports, cultural and religious activities for the villagers and other business associates from Goa. The expenditure is more out of social obligation and welfare of the people which in turn helps in carrying out mining activities in a smooth manner. The said expenditure indirectly helps in promotion of business activities and hence it is an allowance expenditure. The Assessing Officer did not accept this explanation of the assessee and who was of the firm belief that this expenditure is not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal had an occasion to consider the disallowance of expenditure amounting to ₹ 10.70 Lac. incurred on renovation of temple, the counsel heavily relied upon the findings of the Tribunal in the said case, which read as under:- 3.1 We have heard the rival submissions and carefully considered the same. We have also gone through the order of the tax authorities below. It is not denied that transportation of the iron ore was not possible without the co-operation of the villagers as the movement of the trucks had to be through the village where the temple was located for which the Assessee has contributed the amount for renovation. The expenditure incurred for renovation of the temple is also not denied. For carrying on the business smoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure, the assessee has incurred expenditure towards renovation of Bandeshwar temple. This expenditure cannot be considered having been incurred towards corporate social responsibility. In our considered opinion, only expenditure incurred towards discharge of corporate social responsibility can be considered as allowable u/s. 37(1) of the Act. As mentioned elsewhere, we have failed to persuade ourselves to follow the decision of the coordinate bench, we, therefore, refer this issue to the Hon'ble President to be considered by a Special Bench. The question that has to be considered by the Special Bench, so constituted by the Hon'ble President is:- Can the expenditure incurred on the renovation of a temple be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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